EUR/JPY Price Forecast: Bullish tone remains in play above 163.00
- EUR/JPY trades in negative territory near 163.25 in Friday’s early European session.
- The positive view of the cross prevails above the key 100-day EMA, but the RSI indicator suggests neutral momentum.
- The first upside barrier is seen at 164.26; the initial support level is located at 162.10.
The EUR/JPY cross attracts some sellers to around 163.25 during the early European session on Thursday. The Japanese Yen (JPY) strengthens against the Euro (EUR) amid rising expectations that the Bank of Japan (BoJ) will continue raising interest rates this year. Furthermore, the persistent trade-related uncertainties boost the safe-haven flows, benefitting the JPY.
Technically, the bullish outlook of EUR/JPY remains intact on the daily chart, with the price holding above the key 100-day Exponential Moving Average (EMA). However, further consolidation cannot be ruled out as the Relative Strength Index (RSI) hovers around the midline. This suggests a neutral momentum in the near term.
The immediate resistance level emerges at 164.26, the high of May 29. Further north, the next hurdle is seen at 164.75, the upper boundary of the Bollinger Band. A decisive break above this level could pave the way to 165.21, the high of May 13.
On the flip side, the first downside target to watch is 162.10, the 100-day EMA. Extended losses could see a drop to 161.60, the lower limit of the Bollinger Band. The crucial support level for EUR/JPY is seen at 160.00, the psychological level and the low of April 8.
EUR/JPY daily chart
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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